Chinese regulators have launched an anti-monopoly investigation into Alibaba and called in for talks its online finance spinoff, Ant Group – increasing pressure on the e-commerce company founded by the Chinese tech entrepreneur Jack Ma.
On Thursday the state market supervision administration said it had filed an investigation into Alibaba Group Holdings Ltd over “suspected monopolistic practices”.
The People’s Bank of China, China Banking Regulatory Commission, China Securities Regulatory Commission and State Administration of Foreign Exchange said they would also meet Ant Group for “supervisory and guidance” talks. Ant Group is the developer of AliPay, a mobile payment system now ubiquitous and largely essential in China’s economy.
Ant Group said it would “diligently study and strictly comply with regulatory departments’ requests”.
Alibaba shares tumbled 5.48% on the news shortly after the Hong Kong stock exchange opened on Thursday morning.
Regulators had previously warned Alibaba about the so-called “choosing one from two” practice under which merchants are required to sign exclusive cooperation pacts preventing them from offering products on rival platforms.
An editorial in the People’s Daily state mouthpiece said efforts to prevent monopoly and anti-competitive practices were “requirements for improving the socialist market economy system and promoting high-quality development”.
“This investigation does not mean that the country’s attitude towards the encouragement and support of the platform economy has changed.”
Beijing has been seeking to push back on the increasing dominance of Alibaba and the online conglomerate TenCent.
In November, Ant Group, Ant Financial and Alipay were preparing for what would have been the world’s largest initial public offering when it was suddenly shut down by Beijing, 48 hours before trading would have begun in Shanghai and Hong Kong.
At the time the halt was blamed on “changes to the financial technology regulatory environment and other major issues”, but analysts interpreted the shock intervention as a warning to Ma, who had publicly criticised regulators in a speech shortly before the IPO.
“The party has once again reminded all private entrepreneurs that no matter how rich and successful you are it can pull the rug out from under your feet at any time,” wrote Bill Bishop, the author of the China-focused newsletter Sinocism.